Optum Rx Makes Demand Before Companies Lower Drug List Prices

Optum Rx, one of America's largest pharmacy benefit managers (PBMs) sent a letter to drug companies outlining several demands the companies must meet if they seek to lower list prices for their medicines. This would put another obstacles in the path of lowering drug prices.

The letter was sent to several drug manufacturers. In it, Optum demanded a couple of things: 1) at least seven quarters notice before a company reduces its list prices, and 2) equivalent rebates off of lowered prices as compared to existing prices. The message is unclear whether Optum wants rebates to stay the same or the same percentage of a price. But either way, drug companies are unhappy with the letter, since many companies are looking to lower list prices for certain drugs. Additionally the letter was high handed and Optum seems like it is attempting to dictate the terms of various projects.

The letter was obtained by Bernstein, and according to the company, "While recognized as an opening stance in negotiations, the magnitude of the rebate demands by UNH [Optum's parent company] were 'ludicrous' and would force drug makers to rethink price reductions unless they were significantly moderated."

State and federal legislators are debating proposals to lower costs, and this memo comes at a time when drug companies and PBMs are both pointing fingers and blaming each other for skyrocketing drug prices. Both parties bear much of the blame and contribute to rising costs, and both should be held accountable. But PBMs contribute very little benefit-drug companies at least perform innovation and research, and often develop new medicines, while PBMs are middlemen who take a cut and claim to be lowering drug costs. If so, they are doing an appallingly poor job.

Optum's letter to these drug companies is yet another example of how PBMs often do not lower drug prices but instead raise them. Congress, state legislatures, State Attorneys General and Insurance Commissioners, and the Trump administration should support bills to regulate PBMs. Fortunately many states are hearing bills to hold PBMs accountable, and Congress will soon follow suit. Both levels of government should ensure that PBMs do not keep prices high in order to keep more money for themselves.